CHICO'S FAS, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - CHICO'S FAS, INC.	d585667d8k.htm

Exhibit 99.1

LOGO

Chico’s FAS, Inc. • 11215 Metro Parkway • Fort Myers, Florida 33966 • (239) 277-6200

Chico’s FAS, Inc. Reports Second Quarter

Earnings Per Share of $0.27

Fort Myers, FL – August 28, 2013 – Chico’s FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2013 second quarter and twenty-six weeks ended August 3, 2013.

For the second quarter, the Company reported net income of $43.6 million, a decrease of 18.4% compared to net income of $53.4 million in last year’s second quarter, and earnings per diluted share of $0.27, a decrease of 15.6% compared to a record $0.32 per diluted share in last year’s second quarter.

For the twenty-six weeks ended August 3, 2013, the Company reported net income of $94.7 million, a decrease of 11.5% compared to net income of $107.0 million in the same period last year, and earnings per diluted share of $0.58, a decrease of 9.4% compared to $0.64 per diluted share in the same period last year.

Net Sales

For the second quarter, net sales were a record $649.5 million, an increase of 1.2% compared to $641.7 million in last year’s second quarter, primarily reflecting 112 net new stores for a square footage increase of 8.8%. Comparable sales for the second quarter decreased 2.6% following a 5.6% increase in last year’s second quarter, reflecting lower transaction count and average dollar sale primarily as a result of the impact of lower traffic and the cycling of strong comparable sales last year.

The Chico’s/Soma Intimates brands’ comparable sales decreased 3.1% following a 7.2% increase in last year’s second quarter for a two-year stack of up 4.1% and the White House | Black Market brand’s comparable sales decreased 1.5% following a 2.3% increase in last year’s second quarter for a two-year stack of up 0.8%.

Gross Margin

For the second quarter, gross margin was $356.1 million compared to $362.2 million in last year’s second quarter. Gross margin was 54.8% of net sales, a 160 basis point decrease from last year’s second quarter, primarily reflecting increased promotional activity in response to lower traffic and investment in new distribution automation, partially offset by lower incentive compensation as a percent of net sales.

Selling, General and Administrative Expenses

For the second quarter, selling, general and administrative expenses (“SG&A”) were $286.3 million compared to $276.1 million in last year’s second quarter. SG&A was 44.0% of net sales, a 100 basis point increase from last year’s second quarter, primarily reflecting deleverage of occupancy and marketing expenses and the impact of investment spending on strategic initiatives, partially offset by lower incentive compensation as a percent of net sales.

Page 1 of 8

Inventories

At the end of the second quarter, total inventories were $211.1 million compared to $191.7 million at the end of the second quarter last year. Inventories increased by $19.4 million, or 10.1%, primarily reflecting the impact of new stores and the calendar shift from last fiscal year’s 53^rd week. Excluding the impact of the calendar shift as it relates to the timing of merchandise receipts, inventories increased approximately 2.1% from prior year, in line with planned sales growth. In-store inventory per selling square foot decreased approximately 1.4% compared to the second quarter of last year.

Share Repurchase Program

During the second quarter of fiscal 2013, the Company repurchased 1.4 million shares for $25 million under its $300 million share repurchase program announced in February 2013. During the twenty-six weeks ended August 3, 2013 and July 28, 2012, the Company repurchased a total of 4.9 million shares for $85.0 million and 1.8 million shares for $25.6 million, respectively, with $215 million remaining under the program as of the end of the second quarter of fiscal 2013.

ABOUT CHICO’S FAS, INC.

The Company, through its brands – Chico’s, White House | Black Market, Soma Intimates, and Boston Proper, is a leading women’s omni-channel specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing items.

As of August 3, 2013, the Company operated 1,427 stores in the US. The Company’s merchandise is also available at www.chicos.com, www.whbm.com, www.soma.com, and www.bostonproper.com. For more detailed information on Chico’s FAS, Inc., please go to our corporate website at www.chicosfas.com.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements contained herein, including without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the Company or future results or events constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements involve known or unknown risks, including, but not limited to, general economic and business conditions, and conditions in the specialty retail industry. There can be no assurance that the actual future results, performance, or achievements expressed or implied by such forward-looking statements will occur. Users of forward-looking statements are encouraged to review the Company’s latest annual report on Form 10-K, its filings on Form 10-Q, management’s discussion and analysis in the Company’s latest annual report to stockholders, the Company’s filings on Form 8-K, and other federal securities law filings for a description of other important factors that may affect the Company’s business, results of operations and financial condition. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized.

(Financial Tables Follow)

Executive Contact:

Todd Vogensen

Vice President-Investor Relations

Chico’s FAS, Inc.

(239) 346-4199

Page 2 of 8

Chico’s FAS, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)


	Twenty-Six Weeks Ended										Thirteen Weeks Ended
	August 3, 2013					July 28, 2012					August 3, 2013					July 28, 2012
	Amount		% of Sales			Amount		% of Sales			Amount		% of Sales			Amount		% of Sales
Net sales:
Chico’s/Soma Intimates	$	839,395		63.6	%	$	839,960		65.0	%	$	414,734		63.8	%	$	414,618		64.6	%
White House \| Black Market		425,488		32.2	%		386,225		29.9	%		205,090		31.6	%		194,498		30.3	%
Boston Proper		55,342		4.2	%		66,354		5.1	%		29,679		4.6	%		32,606		5.1	%

Total net sales		1,320,225		100.0	%		1,292,539		100.0	%		649,503		100.0	%		641,722		100.0	%
Cost of goods sold		577,239		43.7	%		551,763		42.7	%		293,361		45.2	%		279,542		43.6	%

Gross margin		742,986		56.3	%		740,776		57.3	%		356,142		54.8	%		362,180		56.4	%
Selling, general and administrative expenses		591,161		44.7	%		567,797		43.9	%		286,262		44.0	%		276,121		43.0	%
Acquisition and integration costs		914		0.1	%		841		0.1	%		—		0.0	%		283		0.0	%

Income from operations		150,911		11.5	%		172,138		13.3	%		69,880		10.8	%		85,776		13.4	%
Interest income, net		299		0.0	%		402		0.0	%		108		0.0	%		219		0.0	%

Income before income taxes		151,210		11.5	%		172,540		13.3	%		69,988		10.8	%		85,995		13.4	%
Income tax provision		56,500		4.3	%		65,500		5.0	%		26,400		4.1	%		32,600		5.1	%

Net income	$	94,710		7.2	%	$	107,040		8.3	%	$	43,588		6.7	%	$	53,395		8.3	%


Per share data:
Net income per common share-basic	$	0.58				$	0.64				$	0.27				$	0.32

Net income per common and common equivalent share – diluted	$	0.58				$	0.64				$	0.27				$	0.32

Weighted average common shares outstanding – basic		157,379					163,898					156,589					163,822

Weighted average common and common equivalent shares outstanding – diluted		158,322					164,834					157,573					164,732

Dividends declared per share	$	0.165				$	0.1575				$	0.055				$	0.0525

Page 3 of 8

Chico’s FAS, Inc.

Condensed Consolidated Balance Sheets

(in thousands)


	August 3, 2013		February 2, 2013		July 28, 2012
	(Unaudited)				(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	93,417	$	56,859	$	109,466
Marketable securities, at fair value		208,434		272,499		248,480
Inventories		211,148		206,849		191,694
Prepaid expenses and other current assets		57,492		61,786		52,642

Total Current Assets		570,491		597,993		602,282

Property and Equipment, net		622,708		608,120		576,788

Other Assets:
Goodwill		238,693		238,693		238,693
Other intangible assets, net		125,988		127,754		129,933
Other assets, net		8,212		8,068		6,628

Total Other Assets		372,893		374,515		375,254

	$	1,566,092	$	1,580,628	$	1,554,324


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	139,727	$	129,387	$	139,800
Other current liabilities		140,197		173,024		151,936

Total Current Liabilities		279,924		302,411		291,736

Noncurrent Liabilities:
Deferred liabilities		141,708		132,374		129,782
Deferred taxes		51,018		52,644		50,840

Total Noncurrent Liabilities		192,726		185,018		180,622

Stockholders’ Equity:

Preferred stock		—		—		—
Common stock		1,609		1,628		1,660
Additional paid-in capital		366,032		348,775		320,161
Retained earnings		725,736		742,580		759,838
Accumulated other comprehensive income		65		216		307

Total Stockholders’ Equity		1,093,442		1,093,199		1,081,966

	$	1,566,092	$	1,580,628	$	1,554,324

Page 4 of 8

Chico’s FAS, Inc.

Condensed Consolidated Cash Flow Statements

(Unaudited)

(in thousands)


	Twenty-Six Weeks Ended
	August 3, 2013			July 28, 2012
Cash Flows From Operating Activities:
Net income	$	94,710		$	107,040

Adjustments to reconcile net income to net cash provided by operating activities –
Depreciation and amortization		58,628			52,655
Deferred tax expense (benefit)		3,556			(4,490	)
Stock-based compensation expense		14,304			11,005
Excess tax benefit from stock-based compensation		(1,437	)		(3,367	)
Deferred rent and lease credits		(8,602	)		(8,082	)
Loss on disposal and impairment of property and equipment		753			1,759
Changes in assets and liabilities, net of effects of acquisition:
Inventories		(4,299	)		2,775
Prepaid expenses and other assets		(2,148	)		5,519
Accounts payable		1,483			30,689
Accrued and other liabilities		(13,491	)		30,032

Net cash provided by operating activities		143,457			225,535


Cash Flows From Investing Activities:
Decrease (increase) in marketable securities		63,914			(59,568	)
Purchases of property and equipment, net		(71,745	)		(78,755	)
Purchases of intangibles		(420	)		—

Net cash used in investing activities		(8,251	)		(138,323	)


Cash Flows From Financing Activities:
Proceeds from issuance of common stock		7,900			6,524
Excess tax benefit from stock-based compensation		1,437			3,367
Dividends paid		(17,777	)		(17,530	)
Repurchase of common stock		(90,208	)		(29,026	)

Net cash used in financing activities		(98,648	)		(36,665	)

Net increase in cash and cash equivalents		36,558			50,547
Cash and Cash Equivalents, Beginning of period		56,859			58,919

Cash and Cash Equivalents, End of period	$	93,417		$	109,466

Page 5 of 8

Supplemental Detail on Earnings Per Share Calculation

In accordance with accounting guidance, unvested share-based payment awards that include non-forfeitable rights to dividends, whether paid or unpaid, are considered participating securities. As a result, such awards are required to be included in the calculation of basic earnings per share pursuant to the “two-class” method. For the Company, participating securities are comprised of unvested restricted stock awards.

Earnings per share is determined using the two-class method, as it is more dilutive than the treasury stock method. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects the dilutive effect of potential common shares from securities such as stock options and performance-based restricted stock units (“PSUs”).

The following table sets forth the computation of basic and diluted earnings per share shown on the face of the accompanying condensed consolidated statements of income:


	Twenty-Six Weeks Ended						Thirteen Weeks Ended
	August 3, 2013			July 28, 2012			August 3, 2013			July 28, 2012
	(dollars in thousands)
Numerator

Net income	$	94,710		$	107,040		$	43,588		$	53,395

Net income and dividends declared allocated to unvested restricted stock		(2,612	)		(1,941	)		(1,284	)		(1,006	)


Net income available to common shareholders	$	92,098		$	105,099		$	42,304		$	52,389


Denominator

Weighted average common shares outstanding – basic		157,378,652			163,897,542			156,589,110			163,822,041
Dilutive effect of stock options and PSUs outstanding		943,068			935,972			983,505			910,234


Weighted average common and common equivalent shares outstanding – diluted		158,321,720			164,833,514			157,572,615			164,732,275


Net income per common share:

Basic	$	0.58		$	0.64		$	0.27		$	0.32


Diluted	$	0.58		$	0.64		$	0.27		$	0.32

Page 6 of 8

Chico’s FAS, Inc.

Store Count and Square Footage

Thirteen Weeks Ended August 3, 2013

(Unaudited)


	As of 5/4/2013		New Stores		Closures			As of 8/3/2013
Store count:
Chico’s frontline boutiques		611		5		—			616
Chico’s outlets		102		4		—			106
WH\|BM frontline boutiques		409		7		—			416
WH\|BM outlets		48		4		—			52
Soma frontline boutiques		209		12		(3	)		218
Soma outlets		16		1		—			17
Boston Proper frontline boutiques		2		—		—			2

Total Chico’s FAS, Inc.		1,397		33		(3	)		1,427


	As of 5/4/2013		New Stores		Closures			Other changes in SSF			As of 8/3/2013
Net selling square footage (SSF):
Chico’s frontline boutiques		1,667,756		13,193		—			111			1,681,060
Chico’s outlets		258,491		9,273		—			(91	)		267,673
WH\|BM frontline boutiques		910,115		18,318		—			3,623			932,056
WH\|BM outlets		97,604		8,636		—			—			106,240
Soma frontline boutiques		398,717		23,951		(5,550	)		(3,619	)		413,499
Soma outlets		30,773		1,909		—			—			32,682
Boston Proper frontline boutiques		2,878		—		—			—			2,878

Total Chico’s FAS, Inc.		3,366,334		75,280		(5,550	)		24			3,436,088

Page 7 of 8

Chico’s FAS, Inc.

Store Count and Square Footage

Twenty-Six Weeks Ended August 3, 2013

(Unaudited)


	As of 2/3/2013		New Stores		Closures			As of 8/3/2013
Store count:
Chico’s frontline boutiques		606		13		(3	)		616
Chico’s outlets		99		7		—			106
WH\|BM frontline boutiques		398		20		(2	)		416
WH\|BM outlets		45		7		—			52
Soma frontline boutiques		193		29		(4	)		218
Soma outlets		16		1		—			17
Boston Proper frontline boutiques		—		2		—			2

Total Chico’s FAS, Inc.		1,357		79		(9	)		1,427


	As of 2/3/2013		New Stores		Closures			Other changes in SSF			As of 8/3/2013
Net selling square footage (SSF):
Chico’s frontline boutiques		1,653,252		33,955		(7,777	)		1,630			1,681,060
Chico’s outlets		251,846		16,095		—			(268	)		267,673
WH\|BM frontline boutiques		873,183		50,436		(4,247	)		12,684			932,056
WH\|BM outlets		91,619		14,621		—			—			106,240
Soma frontline boutiques		370,770		57,698		(7,863	)		(7,106	)		413,499
Soma outlets		30,773		1,909		—			—			32,682
Boston Proper frontline boutiques		—		2,878		—			—			2,878

Total Chico’s FAS, Inc.		3,271,443		177,592		(19,887	)		6,940			3,436,088

Page 8 of 8

CHICO'S FAS, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE - August 28, 2013

Attached files

CHICO'S FAS, INC. Reports